How the FAIRtax Will Encourage Investment and Unlock the Sale of Assets
America’s current tax system penalizes people for moving their money to a better use. A homeowner with a gain above the applicable exclusion, an entrepreneur selling a business, or an investor selling appreciated stock may incur federal capital-gains tax when the gain is realized.
An example is the housing affordability squeeze.
When you add inflation, you see that there is another strong disincentive to sell.
Inflation can create a taxable gain on paper where there is no real gain in purchasing power.
Under H.R. 25, the FAIRtax Act of 2025, the federal income tax is repealed and replaced by a tax on taxable retail consumption. Purchasing capital assets such as stocks, precious metals or real estate for investment purposes is not considered “retail consumption”, and is therefore exempt from the FAIRtax. Used and intangible property is also exempt. Thus, the appreciation of an investment is not subject to a federal capital-gains tax when the owner sells it.
The distinction is fundamental:
Current system:
$100,000 investment → inflation raises nominal value → sale creates taxable capital gain → tax is imposed even though all or part of the gain may simply be inflation.
FAIRtax:
$100,000 investment → inflation raises nominal value → asset can be sold without a federal capital-gains tax → tax occurs later only when the investor uses money to purchase taxable new goods or services for consumption.
The 4% example is particularly striking: a $100,000 asset purchased in 2000 must rise to about $277,247 today merely to maintain its original purchasing power, yet the current system would characterize that $177,247 rise in value as a nominal capital gain. At a 20% rate, that produces a $35,449 federal tax on an investment that has earned no real return. Under the FAIRtax, the federal tax triggered merely by selling that investment would be zero.
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Independent tax research supports the underlying economic principle. The Tax Foundation explains that a consumption-based tax avoids the multiple layers of taxation that can fall on saving and investment under an income tax. When investment returns are repeatedly subjected to taxation, the after-tax return falls and immediate consumption becomes relatively more attractive. A consumption tax changes that incentive by taxing dollars when they are ultimately consumed rather than simply because they are saved and invested.
The FAIRtax would also encourage the sale of existing assets. H.R. 25 excludes the sale of “used property” from taxation. This includes property on which the FAIRtax has already been paid without a subsequent credit, and certain property already held for nonbusiness purposes on December 31, 2026. Thus, qualifying property is not repeatedly taxed every time it changes hands.
An American Action Forum study concluded that moving toward taxing consumption rather than income improves long-run incentives for saving, capital accumulation, output and productivity. In its modeled base case, real investment spending averaged 18.3 percent higher during the first five years.
CONCLUSION
The economic case for the FAIRtax, therefore, goes far beyond tax simplification. It replaces a system that taxes earning, saving, investment and realized gains with one focused on final consumption.
When investors can change investments without paying a capital-gains toll, property owners can sell qualifying appreciated assets without an income-tax penalty, and businesses can invest without federal income taxes reducing the return, capital can move toward its most productive use.
The result--more asset sales, more investment, greater capital formation and a tax system that rewards putting wealth to work instead of locking it in place.
The FAIRtax repeals federal individual and corporate income taxes and federal payroll taxes and replaces them with a transparent national retail consumption tax. The legislation expressly provides for repeal of both the income tax and payroll taxes.
Isn’t it time that we have a federal tax system that rewards things that benefit society?
People are upset with our present income/payroll tax system because it benefits only a small percentage of the population—the very wealthy and Members of Congress who fund their re-election campaigns by selling favorable tax treatment to the highest bidder.
For the rest of us, it’s an expensive, intrusive, incomprehensible mess that none of us fully understands.
THE FAIRTAX IS THE ANSWER.
The FAIRtax Act (H.R. 25) is more than just a proposal for a retail sales tax; it is a fundamental restructuring of the federal fiscal structure. Unlike other excise taxes which normally are applied to specific products and in different percentage amounts, the FAIRtax applies a 23% rate to all new retail products and retail services.
The FAIRtax is a national retail sales tax on new retail goods and retail services which provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck, and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT, AND YOU’LL NEVER BE HARASSED BY THE IRS EVER AGAIN.
Many of you have labored tirelessly for freedom from the federal income tax and the IRS. You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.
It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax.
Make no mistake about it. The FAIRtax is a grave threat to the Ruling Elites. It will strip them of their power and their ability to control us though the tax system. Their opposition to the FAIRtax will be fierce and unrelenting. And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power.
However, with the support of this President, we can finally eliminate the income tax and the IRS!!!
Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well so no future administration can ever shackle the American people with an income tax again.
We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.
This will take the diligent efforts of all of us. We need your financial assistance, and we need your grass roots assistance.
If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.
Please email us at info@FAIRtax.org and we will give you some options on how you can best help us.
At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax. If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already. If not, ask why not. If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.